Tag Archives: Lifeline

Broadband Adoption and Income

eyeballThe Brookings Institute just released a report, Broadband Adoption Rates and Gaps in U.S. Metropolitan Areas, that looks at metropolitan broadband rates around the country. The report uses a broad definition of broadband that includes cable modem, DSL, fiber, cellular data, satellite, and fixed wireless service.

The report acknowledges that broadband is still growing and the country saw 2.6 million households add broadband from 2013 to 2014, bringing the overall national penetration rate to 75.1%. But Brookings found that there is a lot of variance in the penetration rates in different parts of the country.

There are metropolitan areas like San Jose where the broadband penetration rate is greater than 88%. The top ten metro markets for broadband has Washington DC in tenth place at 84.7%. But there are a number of other cities that lag behind these national statistics. At the bottom is Laredo, TX at 56.2%, joined at the bottom of the list with places like McAllen, TX, Visalia, CA, Dothan, AL, and Beaumont, TX.

Brookings looked at a number of different factors that affect broadband usage for households. It’s not surprising that household income is a factor. Households with an annual income greater than $50,000 have an 88.8% broadband penetration rate while those with less than $20,000 income are only at 46.8%. Education also seems to be an influence and 91.5% of households with somebody with a bachelor’s degree have broadband while households where nobody finished high school are at 54.1%.

The report did not find a big correlation between race and broadband adoption. While there were cities where blacks or Hispanics have low broadband adoption rates, there were others where they did not. The report concludes that the determining factor is household income and not race.

The report also found some correlation with age and households that have a family member under 18 had a penetration rate of 81.9% while those with everybody over 65 were at 64.5%. But the correlation with age did not hold across all markets and the places where the elderly have lower broadband acceptance seems to be where their income is the lowest. So again, income seems like a more important factor than age.

The report found a few correlations that make a lot of sense. For instance, it found that almost all homes that include a telecommuter have broadband.

Overall the report concludes that metropolitan areas with the highest incomes, with the highest percentage of tech workers, and with the highest average education also have the highest broadband penetration rates.

The report observes that households widely value broadband and that the rate of broadband subscriptions continues to climb. But they conclude that we cannot make the transition to an all-digital society until broadband penetration rate is as ubiquitous as the rates for water and electricity. They conclude that it is going to take targeted assistance programs to get broadband into more homes. While they point to the federal Lifeline and the newly named ConnectHome programs as being a needed part of the solution, they don’t see these kind of programs closing the digital divide. They recommend many more local initiatives, including programs by carriers, to try to get broadband into more households.

FCC Issues for 2016

Alexander_Crystal_SeerIn what seems to be the new normal the FCC has a lot of issues on their plate at the end of this year. Following are the regulatory issues that I think will most affect small telcos, cable companies, and ISPs in the coming year.

Net Neutrality: Assuming that the courts don’t completely overturn this, this is liable to be at the top of the list for several years to come. The ink is barely dry on the new rules and companies like Comcast, T-Mobile, and Verizon are pushing new products that will test the FCC’s resolve to implement net neutrality. And if the courts uphold the law, expect to see a slew of arbitrations between content providers and ISPs. If the courts overturn parts of the new rules, expect the FCC to take one more shot at fixing the parts that don’t pass court muster.

TDM to IP Conversion: This is an ongoing process that is looking at modernizing the backbone telephone network to IP. The large telcos like AT&T and Verizon have commandeered the docket to try to use it as a way to get rid of rural copper lines. The FCC has been micromanaging this process so far and there should be a lot of activity in 2016.

USF Reform: The FCC wants to transition the Universal Service Fund from paying for rural telephone lines to paying for high speed data connections. This process has already started but there is still a lot to be decided. Further, the FCC is facing a crisis in funding the USF and the latest USF contribution factor, representing the ‘tax’ on interstate telecom services, is up to an astounding 18.2% for the first quarter of 2016. The FCC is going to have to find some other ways to help fund this as interstate telecom revenues keep shrinking. This is becoming a big burden on carriers that are buying interstate special access.

Lifeline Reform: Lifeline is another part of the USF that is used to help pay for telecom services for low income households. The FCC decided last year that this should cover both telephone and data expenses for low income households and there is not enough money in the fund to do that. So this year they need to figure out a way to make it work.

Skinny Bundles and OTT: There has been a docket open for most of 2015 that asked for comments on how the FCC ought to regulate video services on the web. There hasn’t been a lot of talk about this for a while, but it’s likely that the FCC is going to have to do something with this in 2016, and anything they do will be groundbreaking. Further, the FCC is in the process of cleaning up their operating rules and Congress is also mandating that they resolve dockets sooner, so this is liable to be forced to come to a head in 2016.

WiFi versus LTE-U: The large wireless carriers really want to dip into WiFi to make cellular data connections using a technology they are calling LTE-U. In places where cellular data is already overloaded this would almost certainly swamp WiFi, making it hard for anybody else to use. The FCC is going to have to decide if and how cellular carriers might be allowed to do this. In a related area, the FCC is also likely to look at opening up new public spectrum next year.

Federal Legislation: While this is nothing to count on, there has been a lot of noise about seeing a new telecom act of some sort out of Congress. If that happens there is no way to predict what Congress might tackle. If a new law passes expect the FCC to get swamped with implementing new law like they did after the Telecom Act of 1996.